Bloomberg News | October 25, 2024 |
The Mali-based Loulo-Gounkoto complex includes Loulo underground mines, Yalea Gara and the Gounkoto open pit mine. (Image by Randgold Resources)
Mali’s military government has threatened to take back Barrick Gold Corp.’s Loulo mine concession when the current permit expires in 2026, amid an escalating dispute over how to divide the economic benefits from operations in the country.
Mali is considering letting the permit for Loulo lapse when it expires in February 2026, Finance Minister Alousseni Sanou said in an Oct. 18 letter sent to Barrick’s chief executive officer Mark Bristow, and seen by Bloomberg. Mali “reserves the right not to renew the operating permit” and invited Barrick to talks on the mine’s “transition phase” starting later this month, Sanou wrote.
The move comes as the junta has taken an increasingly hard line against the world’s second biggest gold miner, including briefly jailing four of its local executives last month over alleged “financial crimes.” Mali this week accused Barrick of failing to honor a September agreement aimed at resolving their disputes, which the Canadian company has denied.
A spokesman for Barrick declined to comment when reached by phone. Mali’s Finance Minister Sanou declined to comment in a text message.
The Loulo concession forms part of the Loulo-Gounkoto complex, in which Barrick owns 80% and the government holds the rest. The larger site represented roughly 13% of Barrick’s attributable gold production in 2023, according to its annual report.
CEO Bristow has visited the West African country repeatedly over the last year — including a stop at the mine in March where he told local media that it contributed more than $1 billion to the Malian economy in the past 12 months.
The country last week rejected Barrick’s proposal to divide the economic benefits from Loulo-Gounkoto 55% for Mali and 45% for the company.
The junta’s demands on Barrick follow a 2023 audit of mining contracts and a push to renegotiate existing agreements with mining companies — including B2Gold Corp, Allied Gold Corp and AngloGold Ashanti Plc — in a bid to boost the state’s revenue from its mineral resources through a new mining code adopted last year.
The new code comes as Mali seeks to shore up its revenue following a 2020 coup that saw the country cut off from aid and the regional debt market. The code says that the state and “national interests” could increase stakes in mining projects to 35% from 20% previously. It also reduces the duration of mining licenses to 10 years from 30 years and adds a provision for more Malian nationals in leading positions in mining entities.
Mali has been pushing foreign mining companies including Barrick to align with the new regulations, which should only apply to new contracts and renewals of existing permits, Assane Sidibe, the president of the mining commission within the National Transitional Council told Bloomberg last year.
The junta hasn’t taken any steps to implement the agreed extension of the Loulo mining convention, which Barrick negotiated with the civilian government the military ousted in 2020, according to the company.
Escalating tensions
Tensions between Barrick and the government have escalated in the past month, after Mali briefly detained the four executives, all Malian nationals.
In a letter on Oct. 14, also seen by Bloomberg, Bristow proposed a 225 billion CFA franc ($371 million) financial settlement and the conclusion of a memorandum of understanding relating to Barrick subsidiary Société des Mines de Loulo’s operational permit.
Barrick’s changes to the government’s draft “are essential to preserve the economic viability of the Loulo-Gounkoto complex,” Bristow said. “These changes aim at assuring a just and fair split of the economic benefits generated by the complex.”
In the letter on Oct. 18, Sanou rejected Barrick’s proposal saying it was “fundamentally different” to Mali’s version.
(By Katarina Höije, Diakaridia Dembele and William Clowes)
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